Residential prices will have to fall by as much as 15 per cent before the Government considers relaxing the property cooling measures, economists say.
They note that while home prices have come down, they still have some way to fall before a change of policy can be triggered, although the moves on interest rates in the United States may have some bearing as well.
Mr Ong Kian Lin, an analyst with RHB Research Institute Singapore, said the probability of the Additional Buyer's Stamp Duty (ABSD) being lifted next year when property prices islandwide could have fallen 12 per cent to 15 per cent "certainly looks more palatable at this stage".
MORE SIGNS NEEDED
We think perhaps another 5 per cent to 10 per cent or so of house price declines, especially in the mass market and HDB segment, may be required before affordability is deemed to have been restored.
CITIGROUP ECONOMIST KIT WEI ZHENG
He added: "Despite expectations building up for more pro-growth policies, we do not think any easing (particularly property) will be done this year, as the property price index is still down only 6.7 per cent from its peak in the third quarter of 2013 and down 3.7 per cent from a year ago.
"There may also be pushback from the populace if asset prices spike right after elections."
Mr Ong said a gradual approach, based primarily on data, to loosening the property cooling measures would make more sense for the new Cabinet.
A DBS report yesterday said measures, such as the ABSD, may be eased after global interest rates return to some normalcy and in the light of how heavily leveraged households here are.
Citigroup economist Kit Wei Zheng said in a research note that a price decline of as much as 10 per cent and an increase in mortgage rates above the historical average of 3.5 per cent would be required to trigger an easing of the property cooling policies.
"While the government had sought to de-link any correlation with elections, policymakers will be less politically constrained in relaxing property measures once housing affordability is deemed to have been restored, and mortgage rates move closer to historical mean, which suggests that any immediate post-election relaxation remains unlikely," he added.
"We think perhaps another 5 per cent to 10 per cent or so of house price declines, especially in the mass market and HDB segment, may be required before affordability is deemed to have been restored."
Despite the recent increase in short-term interest rates, mortgage rates remain some distance from the historical average level of 3.5 per cent.
Once both these thresholds have been reached, a staggered reduction in ABSD and the seller's stamp duty is likely, Mr Kit said.
"Even so, unless there is an unlikely massive U-turn in immigration policies, the pipeline of incoming supply will imply a worsening demand-supply balance through 2017 to 2018, keeping rents and prices under pressure," he warned.